For PE-backed firms executing roll-up strategies and high-growth independents pursuing acquisitions, integration quality determines success. Roman Kepczyk shares critical lessons about standardizing tech stacks. Learn about the six-to-twelve-month integration window and how to unify acquired firms into a powerful, all-in-one platform.
PE firms approach integration with specific metrics and standardization. This maximizes productivity and reduces risk. Discover why standardization enables better collaboration, faster training, and improved client service. All while maintaining the security and compliance standards investors expect.
Watch the full series to discover how to accelerate growth and scale with confidence.
Learn more about solutions for investor-backed and high-growth firms at https://www.rightworks.com/solutions/pe-backed-firms/
Speakers:
Derek Distin, VP of Community at Rightworks
Roman Kepczyk, CPA.CITP, CGMA, PAFM, Director of Firm Technology Strategy at Rightworks
Transcript
Derek: What are some of the biggest challenges when you’re going through an M&A project?
Roman: When we talk about a firm being acquired or merged into a practice, the biggest challenge is getting all of the data and the processes standardized to the parent’s infrastructure. We recommend all organizations have a standardized tech stack so they can optimize productivity, standard operating procedures and training within the organization that’s out there. We found that those organizations that had a really good standardized procedure and learning organization concept also were very effective at acquiring non-typical firms or firms with different applications and then bringing those organizations into the fold very effectively.
Derek: But doesn’t that make it more difficult for my IT team to manage applications? If I’m bringing in multiple different applications, shouldn’t I be concerned about trying to find somebody who uses the same tech I do?
Roman: Definitely finding, requiring a practice that has the same tech as you have is significantly easier and more effective in the long run. But we find that there are some profitable firms that have different applications, but maybe a specific niche that the parent company wants to acquire. So it’s worth that risk. But I will tell you that the IT teams struggle, particularly the medium and smaller teams struggle with learning these new applications, the nuances of how that data works and then transitioning them in. And so we strongly encourage going to a firm-wide tech stack as soon as possible, between six months and a year should be the maximum time for that transition. Otherwise we find that the IT team struggles with keeping the network and the data stable.
Derek: So in that six to 12 months, what do I need to be worried about? If I’ve just made an acquisition, what do I need to be worried about to know that 12 months from now I’ll be successful?
Roman: I think the worst demerger I ever went through was they didn’t adhere to the one year rule. They basically let the acquired practice continue using their applications. And so the problem that came out of that was we could not share staff anymore. We couldn’t share work because if one firm used one tax product or one engagement binder and didn’t know how to use the other, it made it harder to review that information. And so we strongly encourage that organizations standardize as quickly as possible. If it’s going to be more than a year, maybe decide not to do that merger.
Derek: How has private equity tackled this challenge?
Roman: Private equity, you got to remember, is they have for decades basically optimize their investments in other industries and they do that with very specific metrics and information. And so we see that when it comes to accounting infrastructure, we surprise them a little bit with the complexity of the types of firms we have, the different divisions of firms as far as when we talk about types of clients as well as tax assurance through CAS, that sheer volume. And so we have not been as easy to standardize as maybe some of the other industries they went into, whether they were doctors or dentists or dermatologists.
Derek: What is a benefit beyond the business side of things of standardizing my tech stack as quickly as possible post acquisition?
Roman: I think standardizing your tech stack allows for people to share work effectively, to cover for each other and to train each other more effectively on the best practices that they’ve identified in that process.
Derek: And in doing so, does that boost client service? Does that boost staff morale?
Roman: Initially, it doesn’t always boost morale that’s out there because people can be resistant to change. And so the ones that do it really well optimize the change management. And we’ve seen that from, like I said, I’ve worked with six different private equity groups and three or four of them have done a really good job on making it very effective for firms to transition into the parent tech stack that’s out there and promoting that as part of the culture.